Iran seized three British naval vessels today that entered its territorial waters near the Iraqi border and arrested eight crew, Iranian officials said.
Although Tehran is deeply opposed to the US-led war and occupation of neighbouring Iraq, there has been little direct conflict up to now between Shia Muslim Iran and foreign forces along its western border.
The incident is likely to place further strain on Tehran's ties with London, which last week joined other European nations in condemning Iran for being less than fully co-operative with inspectors from the UN's nuclear watchdog.
"This morning three British vessels with eight crew entered the Islamic Republic of Iran's waters and Iran's naval forces, acting on their legal duty, confiscated the vessels and arrested the crew," Foreign Ministry spokesman Hamid Reza Asefi said in a statement.
"The crew are under investigation in order to clarify the issue," he added.
State media said the incident took place in the narrow Shatt al Arab waterway which separates southwestern Iran from Iraq.
Britain confirmed it had "lost contact" with three vessels and eight sailors in the strip of water. The Defence Ministry described as "rubbish" a report that the vessels were warships and said it didn't have any large vessels in the area.
It said Britain had small naval ships there helping to train Iraqi police.
A British diplomat in Tehran said the British government was in close contact with Iranian authorities in Tehran and London.
Iran's state television said maps and weapons carried on the British vessels were confiscated.
Revolutionary Guards spokesman Mr Massoud Jazaeri said Iran was determined to defend its territorial integrity. "Anyone from any nationality entering our waters will face the same response," Mr Jazaeri said.
Iran's Revolutionary Guards, a branch of the armed forces charged with defending Iran's Islamic revolution, earlier this month seized some eight fishing vessels from the United Arab Emirates in a tit-for-tat measure after the Emirates took an Iranian boat that had strayed into its waters.